The Securities and Exchange Commission’s (SEC) Hester Peirce is speaking out against Chair Gary Gensler’s anti-crypto agenda. In a new lecture, Peirce criticizes the regulatory agency for proposing to modify the definition of “exchange” to include decentralized finance (DeFi) technologies.
Such a move, according to Peirce, would be detrimental and would only serve to force centralization and stagnation. “The watchwords of this release are stagnation, centralization, expatriation, and extinction.” Rather than embracing the promise of new technology, we suggest here embracing stagnation, forcing centralization, encouraging expatriation, and welcoming the extinction of new technology. As a result, I disagree.”
According to Peirce, the SEC’s proposal could breach First Amendment protections by classifying blockchain ecosystems as a “group,” generating doubt regarding their free expression rights. “The ambiguity of the release jeopardizes fundamental First Amendment protections.” Because the publication classifies everyone in the relevant blockchain ecosystem as a group,’ it creates significant ambiguity about what communication requires government clearance, which would unavoidably suppress constitutionally protected speech.”
The Commissioner goes on to argue that the SEC should remain open to the idea that it will need to change its rules to accommodate new technologies, something she claims it recognized in the 1990s. According to Peirce, the SEC’s latest announcement heralds a new age in which cutting-edge enterprises may be excluded because they do not meet existing regulatory standards.
“A Commission serious about regulating – rather than destroying – this market would consider this near-unblemished record of regulatory failure and take action.” We would consider the possibility that our rules, which have previously evolved to address the needs of, and risks posed by, investors and firms in traditional securities markets, may need to be tweaked to allow firms to offer innovative ways of doing finance using novel technologies.
The Commission of the 1990s recognized this fundamental premise and made room for considerable improvements in securities trading. This release, on the other hand, believes that any business model that cannot meet the precise standards of our current regulatory architecture should not be allowed in our markets.”
